Page 214 - DCOM507_STOCK_MARKET_OPERATIONS

Unit 10: Technical Analysis

Extending Analyses Notes
The Text Analytics Collection comes pre-packaged with components for performing trend
and correlation analyses, which can be very valuable. However you may want to extend
these analyses further, for example by performing a trend-correlation computation to
look for changing correlations over time. With this type of analysis you can ask questions
such as “what pairs of topics are becoming hot?” and survey the changing landscape of
science and industry. This can point out areas of opportunity or, conversely, areas of tight
competition.
One of the great strengths of Pipeline Pilot is the ability it offers you to customize your
analyses. Unlike many other applications that limit you to only the pre-packaged analyses,
Pipeline Pilot makes it straightforward to flexibly combine pre-packaged components
into analysis pipelines to achieve the desired analysis.
Question
Discuss the topic correlation.

Source: http://accelrys.com/resource-center/case-studies/pubmed-trend-analysis.html

10.8 Summary

 The term technical analysis is used to mean a fairly wide range of techniques; all based on
the concept that past information on prices and trading volume of stocks gives the
enlightened investor a picture of what lies ahead.
 It attempts to explain and forecast changes in security prices by studying only the market
data rather than information about a company or its prospects, as is done by fundamental
analyst.

 Fundamentalists study the cause, not the ‘should.’ They make their decisions on quality,
value and depending on their specific investment goals, the yield or growth potential of
the security.
 Some critics see technical analysis as a form of black magic. Don’t be surprised to see them
question the validity of the discipline to the point where they mock its supporters. In fact,
technical analysis has only recently begun to enjoy some mainstream credibility.
 While most analysts on Wall Street focus on the fundamental side, just about any major
brokerage now employs technical analysts as well.
 The technician must (1) identify the trend, (2) recognize when one trend comes to an end
and prices set off in the opposite direction.

10.9 Keywords

Dow Theory: According to Dow, “The market is always considered as having three movements,
all going at the same time.

Elliott Wave Principle: The EWP states that major moves take place in five successive steps
resembling tidal waves.
Fundamental Analysis: Fundamentalists study the cause, not the “should.” They make their
decisions on quality, value and depending on their specific investment goals, the yield or
growth potential of the security.
Minor Trends: The minor trends have little analytical value, because of their short duration and
variations in amplitude.

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